Jonathan Martin: Gen-X retirees will have less to show

Originally published April 10, 2013 at 4:09 pm

Updated April 10, 2013 at 7:46 pm

My generation was supposedly about apathy. Disengaged. Slackers.

What a crock.

Tattoos beneath suits, Mudhoney CDs stashed in the basement, Generation X instead is defined by its entrepreneurial streak. We cranked out Google, Twitter and eBay before middle age. We should be in our prime.

Poll after poll finds Generation X — early 30s to late-40s, the skinny sandwich between the Baby Boomers and Millennials — as the generation most wracked with anxiety about retirement.

We have good reason. The American compact used to be one of shared gain and shared sacrifice. Each generation would do better than the previous.

That promise seems bankrupt for my generation.

Our elders enjoyed rising home values, historically low tax rates in their prime earning years and cheap public colleges.

Us? We’re the generation of bubble-priced homes and stagnant wages. We’re bracing to both care for our aging parents while trying to save for our kids’ inflated college tuition.

Consider Social Security, the bedrock of retirement. It is expected to reach “exhaustion” — the actuarial term for “sorry about that” — in 2033, just in time for our golden years.

President Obama’s proposed solution was limiting cost-of-living increases. It would be a relatively small hit to current or near retirees, but an AARP poll found 87 percent of retirees believe it’s “very important” not to cut benefits now.

Meanwhile, my generation won’t be able to touch our full Social Security benefits until at least 67 — and that assumes it won’t go broke. The longer the fix is delayed, the sharper the cut for my generation. Thanks for looking out for us, grandpa!

The retirement backup plan — defined-benefit pensions — is gone. Just 12 percent of Americans have one, with the percentage dropping faster than Eddie Vedder from a speaker tower.

But it’s not gone for our elders. A recent Associated Press expose on the gold-plated pension benefits of Washington firefighters and cops hired before 1977 is a reminder that they helped themselves to far richer retirements than Generation Xers can imagine.

We’ll also be paying off two other generous state pension funds, for teachers and public employees, also hired before 1977, because they’re underfunded. State and local governments and school districts had to pay an extra $320 million last year, money that could be going to their grandchildren, our children.

Overall, wealth accumulation among 35- to 44-year-olds is 44 percent lower than our counterparts in 1984, according to the Pew Research Center.

That’s in part because we launched careers just in time for the tech bubble to burst. My friends keep fistfuls of shares of defunct companies like bowling trophies.

Based on buy-and-hold conventional wisdom, many of us bought first houses at the peak of the housing bubble. We tumbled through the crash: median age for a foreclosed homeowner is 44, and Generation X carries at least a third more home debt than Baby Boomers, according to the Consumer Expenditure Survey.

The future looks bleak because it is. Baby Boomers have done a poor job of financial planning. Less than 1 percent of people 55-64 set aside enough for their golden years, according to the National Institute on Retirement Security.

That constitutes a hidden bomb of debt. Who will fund all those nursing home beds? Perhaps we could borrow from China, as the politicians of previous generations did to finance endless wars and tax cuts?

More likely, we’re going to have to borrow to put our kids through college. Tuition has spiked 1,120 percent since 1978, undermining the great economic engine of cheap public higher education.

The obvious fix — for Social Security and for college costs — is to end the historically low federal tax rates for the wealthiest. Hike the Social Security tax up the income bracket, and the bedrock will be there for my generation.